The Falsification of Four Popular Hypotheses About the Asian Crisis

Various claims have been made about the causes of the Asian crisis and its spread. Here, we use data on the behaviour of capital flows during the crisis to test the strong forms of four such hypotheses, that portfolio investors and hedge funds played a dominant role in initiating and/or spreading the crisis; that moral hazard kept efficient markets from predicting the crisis; and, finally, the common lender hypothesis of Kaminsky and Reinhart. In the process we also test implications of the Calvo-Mendoza model of rational investor ignorance. All are falsified as monocausal explanations. For example, portfolio investments that could not have been subject to substantial moral hazard continued to flow into Asia until very shortly before the crisis. Likewise, banks were a much larger source of capital outflows during the crisis than were portfolio investors. While falsified in their strongest forms, several of these hypotheses in less strong forms should play a role in a more nuanced analysis. It is necessary to move past simple single-factor approaches in order to produce a more complete, synthetic explanation of this episode.     

On the smoothness of optimal paths II: some local turnpike results

We study the local turnpike property for two classes of infinite-horizon discrete-time deterministic maximization problems which have common applications, e.g., optimal growth theory. We follow a functional-analytic approach and rely on an implicit function theorem for the space of the sequences which converge to zero. We shall assume the existence of an optimal path which is not necessarily a steady-state. Relying on material developped in Blot and Crettez (Decis Econo Finance 27:1–34, 2004), “On the smoothness of optimal paths” Decis Econ Finance, 21:1–34, 2004), we provide conditions under which a variation in the initial conditions (i.e., capital stock and discount rate) yields an optimal solution which converges toward a reference solution when time becomes infinite. We also provide new results on bounded solutions of difference equations. We gratefully thank the editor, Silvano Holzer, and two anonymous referees for remarks and advices on a previous version of this paper.     

Employer Penalties for Failure to Provide Individual Employee Notification Under the Family and Medical Leave Act: “Clarifications” Following Ragsdale v. Wolverine Worldwide, Inc.

This article examines the Supreme Court's ruling in Ragsdale v. Wolverine Worldwide, Inc. (2002) and considers its implications for employer and employee rights and responsibilities relative to implementing the FMLA policies. We provide an overview of the pre-decision regulatory environment including the general leave provisions of the FMLA and DOL's regulations requiring employer notification of leave designated as FMLA leave. We also identify those provisions that the decision did not alter and provide a broader consideration of the issues and implication of this decision for employers and employees.     

Evolution of harvesting strategies: replicator and resource dynamics

Abstract. Economic theories of managing renewable resources, such as fisheries and forestry, traditionally assume that individual harvesters are perfectly rational and thus able to compute the harvesting strategy that maximizes their discounted profits. The current paper presents an alternative approach based on bounded rationality and evolutionary mechanisms. It is assumed that individual harvesters face a choice between two harvesting strategies. The evolution of the distribution of strategies in the population is modeled through a replicator dynamics equation. The latter captures the idea that strategies yielding above average profits are demanded more than strategies yielding below average profits, so that the first type ends up accounting for a larger part in the population. From a mathematical perspective, the combination of resource and evolutionary processes leads to complex dynamics. The paper presents the existence and stability conditions for each steady-state of the system and analyzes dynamic paths to the equilibrium. In addition, effects of changes in prices are analyzed. A main result of the paper is that under certain conditions both strategies can survive in the long-run. Correspondence to: J. Noailly     

Are there nonlinear relationships between the profitability of Portuguese service SME and its specific determinants?

Using quantile regressions, this paper examines the possibility of significant nonlinear relationships between the profitability of Portuguese service small- and medium-sized enterprises (SMEs) and its specific determinants. The results lead to the conclusion that there is a significant nonlinearity between specific determinants and profitability in Portuguese service SMEs. In the lower quantiles of the distribution of profitability of Portuguese SMEs, it is found that profitability on the one hand is catalysed by size, long-term debt and managerial control, and on the other hand, it is restricted by risk and research and development intensity. In the upper quantiles of the profitability distribution of Portuguese service SMEs, liquidity and research and development intensity serve as catalysers of profitability, while long-term debt restricts the level of profitability.     

Exploring sources and outcomes of trust and commitment to nonprofit organizations: The case of Amnesty International Portugal

The interactions between customers and organizations have been regarded as a core aspect in cocreating and developing new products and practices. The current study explores these interactions in the context of citizens and nonprofit organizations. The study comprises two parts: (a) a qualitative approach using interviews and the analysis of social networks to better understand the organization's social media marketing practices and corresponding outcomes and (b) a quantitative approach to analyze antecedents and outcomes of trust and being committed to participate in a nonprofit organization such as Amnesty International. From the qualitative approach, the findings highlight that Amnesty International uses social media (Facebook) to share information, and citizens tend to consider sharing posts, but they do not express new ideas or interact with the organization. These findings contribute to structure the model analyzed in the second stage of the research. Regarding the qualitative approach, the results show that organizational credibility is the most significant driver of trust followed by communicative ability. Affectively commitment to participation and relationship perception act as outcomes of overall commitment.     

Prudent expectations equilibrium in economies with uncertain delivery

In an economy with private information, we introduce the notion of objects of choice as lists of bundles out of which the market selects one for delivery. This leads to an extension of the model of Arrow–Debreu that is used to study trade ex ante with private state verification. Under the assumption that agents are prudent, equilibrium is characterized by the fact that agents consume bundles with the same utility in states that they do not distinguish. This is a weaker condition than the restriction of equal consumption imposed by Radner (Econometrica 36(1), 31–58, 1968), therefore, some no trade situations are avoided and the efficiency of trade increases.